The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar yesterday said its six-week temporary closure of the Wyndham Nassau Resort and Crystal Palace Casino at the tourism cycle’s “lowest point”, a move impacting around 1,000 employees, will alleviate the “tremendous pressure” caused by underperforming business levels and nearby construction.

Explaining the rationale for closing the properties from September 4 to October 17, Robert Sands, Baha Mar’s senior vice-president of external and government affairs, told Tribune Business that the impact from construction work on the $2.6 billion Cable Beach redevelopment was starting to rear “its ugly head”.

Baha Mar had received “a great deal of complaints” from Wyndham guests, and wholesalers such as tour operators, about the negative effects construction was having on the guest experience at the property, Mr Sands said, a key factor behind the temporary closure move.

He added that it was also designed to reduce costs, and losses, associated with the slowest part of the 12-month Bahamian tourism cycle, especially given that the Wyndham was already underperforming on occupancy and room rates.

And Mr Sands said Baha Mar’s decision to offer the 1,000 Wyndham and Crystal Palace employees an Early Retirement and Voluntary Separation Plan, enabling workers to receive “an attractive compensation package” if they chose to leave the properties, was a response to staff requests for such an option.

While the Plan is similar in nature to that offered by the Bahamas Telecommunications Company (BTC) following its privatisation, Mr Sands said Baha Mar’s objective were different, and the resort/owner operator was not focused on “targets” for head count reduction.

“It’s a combination of things,” Mr Sands said of Baha Mar’s decision to close the Wyndham and Crystal Palace, both of which operate under its Cable Beach Resorts brand.

Noting that Baha Mar had closed both properties at matching times, and durations, in prior years, the one exception being 2011, Mr Sands said this year’s closure would also coincide with the planned demolition of two Wyndham towers.

By destroying the ‘F’ and ‘J’ towers during this period, any impact on guests would be minimised, Mr Sands said, adding that Baha Mar’s remaining resort - the Sheraton - would be able to handle all occupancy requirements during the six-week closure.

“It’s an issue we’ve thought about hard and long, but with the comments we’ve received from wholesalers, we decided that rather than delay this, we’ll do it for this limited window,” Mr Sands told Tribune Business.

“I think it’s important to note that we have received a great deal of input from guests and wholesale partners about the ongoing demolition and construction, which is making it difficult for customers to enjoy their stay.”

The construction/demolition effects were likely to drive the Wyndham’s occupancy levels and rates even lower during the lowest point in the business cycle, pushing Baha Mar into the temporary closure in a bid to reduce costs and, in turn, losses.

“This is more about right now creating an environment where we can attract customers and create income,” Mr Sands told Tribune Business.

“This is to reduce losses during that period, which is compromised by the construction and noise levels we’re receiving.”

Mr Sands revealed to Tribune Business several weeks ago that the Wyndham’s “mid-$90s” room rate average for 2012 to-date was “not good enough”, lying between 23-30 per cent below the $130-$135 per night target.

Occupancies at the Wyndham were running in the high 60 per cent-low 70 per cent range for 2012 to-date, rather than the target mid-80 per cent level.

And, while the Sheraton resort was insulated to a certain extent by the Wyndham from the Cable Beach construction, Mr Sands said that property’s room rates - currently in the $150 per night range - “should really” be $30 higher and closer to $180 per night.

Suggesting that the temporary closure would help both Baha Mar and employees, Mr Sands yesterday said the Wyndham was “certainly not achieving the levels of occupancy and rate” that were needed.

“The construction impacts were beginning to show their ugly head,” he added. “We need to get through this particular period, and it’s only going to get worse.

“We are going to do everything in our power to make it work as best we can, which is why we’re doing this temporary closure. We’re going to do everything we can to attract customers in this difficult period.”

With cost levels not changing, but top-line revenues falling even further during a typical September, Mr Sands said the closure would lower costs “somewhat significantly”.

Linked into this is the one-time Early Retirement and Voluntary Separation Plan, which Wyndham and Crystal Palace employees will have four weeks to decide whether to accept it. Compensation will be based on position and length of service, with separation dates dependent on the employee and their function.

“We’re offering it simply because of the construction impacts, the business has been under tremendous pressure, and a number of employees have not been working full work weeks,” Mr Sands told Tribune Business.

“A number of employees have asked us about this particular arrangement. If a number of employees take us up on this offer, when the resort re-opens there will be more man hours spread across the balance of employees.”

He added that “not targets have been set” in terms of reducing staff numbers, and said: “This is not about focusing on numbers right now. Individuals will have to make personal decisions.”